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Coal firms did deal over Obeid land:court

Miles Godfrey

Two resource companies struck a secret mining licence deal that sent the value of former Labor powerbroker Eddie Obeid's land soaring, the competition watchdog alleges.

The Australian Competition and Consumer Commission (ACCC) is investigating Mr Obeid's sons Paul and Moses, as well as Cascade Coal and Monaro Mining, over cartel allegations in relation to the 2009 tender for an exploration licence at the Mount Penny coal tenement near Mudgee, in NSW's central west.

It has served Paul and Moses Obeid with notices to give evidence at a private hearing. They face possible prosecution if they fail to comply.

The men's lawyers claim the notices are invalid and appeared at the NSW Federal Court on Friday to have them struck out.

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Moses Obeid fronted the hearing in Sydney for one-and-a-half hours. He left during the lunch adjournment and did not comment to reporters.

ACCC lawyer John Sheahan told the court that Cascade Coal and Monaro Mining struck a deal for Monaro to drop out of the tender for the mining licence.

Former mining minister Ian Macdonald awarded the licence to Cascade Coal, sending the value of an Obeid family property, Cherrydale Farm, on the tenement soaring by tens of millions of dollars.

"Monaro puts in a bid, Cascade puts in a bid and around the same time does a deal with Monaro to drop out," Mr Sheahan told the court.

"Monaro drops out and Cascade gets the consent."

The Independent Commission Against Corruption (ICAC) found in July 2013 that the Mount Penny licence and two other mining licences were awarded corruptly. The NSW government cancelled them in January.

In its ruling, the ICAC found Eddie Obeid improperly lobbied for the licence to be awarded and alleged he arranged for Monaro to withdraw its tender application.

The ICAC said in its ruling that having one company withdraw its bid was "arguably illegal" under competition law and it was this issue the ACCC was pursuing, including probing the Obeid family's involvement.

The competition watchdog is adamant it will haul in Paul and Moses Obeid for questioning and says the notices served to them are valid.